Older Americans paying thousands of dollars a year for long-term-care insurance now face a practical tax question: how much of that premium can actually reduce their federal tax bill? For taxpayers age 71 and over, the IRS caps the amount of qualifying long-term-care premiums that count as deductible medical expenses at $6,020 for the 2025 tax year, with inflation adjustments pushing that figure higher in subsequent years. The deduction is available only to those who itemize on Schedule A, and the total medical expense claim must still clear the adjusted gross income floor before it delivers any tax savings.
Why the Age-Based Premium Cap Hits Fixed-Income Households Hardest
The deduction exists because Congress treated certain long-term-care insurance premiums as medical expenses under Section 213(d) of the Internal Revenue Code. That provision limits the deductible amount to a dollar ceiling that rises with the policyholder’s age. For the oldest bracket, those 71 and over, the cap is the most generous, but it still may not cover the full premium a retiree pays. Carriers have raised long-term-care rates sharply in recent years, and many policyholders on fixed incomes now pay premiums that exceed the statutory ceiling.
The gap between the cap and the actual premium matters because only the capped amount enters the medical expense calculation on Schedule A. Any premium dollars above the limit produce zero tax benefit. At the same time, the IRS adjusts the cap for inflation each year through a revenue procedure. If those inflation adjustments grow faster than premiums on a given policy, the gap narrows and a larger share of the premium becomes deductible. For policies where premiums have already been hiked well past the cap, however, the annual inflation bump offers only marginal relief.
Statutory Requirements and the $6,020 Cap for 2025 Filers
Not every long-term-care policy qualifies. Under Section 7702B of the Internal Revenue Code, a qualified long-term care insurance contract must provide coverage of qualified long-term-care services, must be guaranteed renewable, and must have no cash surrender value. Policies that fail any of those tests fall outside the deduction entirely, regardless of how much the policyholder pays. The statute also restricts the kinds of refunds and dividends a contract can pay, further distinguishing tax-favored coverage from hybrid or investment-style products.
For those who do hold qualifying contracts, IRS Publication 502 for the 2025 tax year lists the deductible premium limit for taxpayers age 71 or over at $6,020. The Instructions for Form 8853 cross-reference Rev. Proc. 2024-40 for the inflation-adjusted per-diem limits that govern benefit payments, a related but separate calculation. The distinction is important: the premium deduction cap controls how much of the cost of buying coverage can be written off, while the per-diem limit governs how benefits received under the policy are taxed.
Taxpayers who are self-employed may claim the premium through the self-employed health insurance deduction rather than Schedule A, which can bypass the adjusted gross income floor. IRS training materials used in the Volunteer Income Tax Assistance program emphasize that the same age-based dollar caps still apply, even when the deduction is taken “above the line.” In other words, self-employed filers may get better access to the deduction, but they cannot deduct unlimited long-term-care premiums.
How the Medical Expense Floor Limits Real-World Deductions
Even when premiums fall within the statutory cap, many older taxpayers never see a tax benefit because of the medical expense floor. Medical expenses are deductible on Schedule A only to the extent they exceed a percentage of adjusted gross income. Long-term-care premiums that fit under the age-based ceiling are simply one line item in that broader total. If the combined amount of premiums, out-of-pocket prescriptions, dental work and other qualifying costs does not clear the threshold, none of it reduces taxable income.
For retirees with modest itemized deductions outside of medical costs, the standard deduction can be another barrier. Claiming the long-term-care premium as an itemized medical expense helps only if total itemized deductions exceed the standard deduction for the year. Taxpayers who own their homes outright and pay little mortgage interest, for example, may find that even large long-term-care premiums do not justify giving up the standard deduction.
Policy Design, Benefit Taxation and Planning Trade-Offs
The tax rules do not stop at premiums. The same statutory framework that defines qualified contracts also governs how benefits are taxed. Under the long-term-care provisions in the Internal Revenue Code, including the rules incorporated through Section 7702B cross-references, benefits paid under a qualified policy can be excluded from income up to the per-diem limits or the actual cost of care, whichever is greater. This structure is meant to keep most typical long-term-care reimbursements tax-free while capping tax-favored treatment of unusually large cash benefits.
For consumers, these intersecting limits create several planning trade-offs. Some older policyholders consider reducing their benefit levels or shortening benefit periods to keep premiums under the deductible cap, accepting more out-of-pocket risk in exchange for better tax alignment. Others maintain richer coverage even when premiums exceed the ceiling, reasoning that the primary purpose of the policy is financial protection, with the tax deduction as a secondary benefit.
Advisers often encourage clients to evaluate long-term-care premiums alongside other predictable medical costs when deciding whether to itemize. In years when elective procedures, dental implants or significant prescription expenses are expected, it may be easier to clear the medical floor and capture the value of the capped long-term-care deduction. In leaner medical years, the same premium may provide little or no tax advantage, even though the policy remains in force.
Ultimately, the $6,020 cap for taxpayers 71 and older illustrates the tension between encouraging private long-term-care coverage and limiting the revenue cost of tax subsidies. For fixed-income households facing rising premiums, understanding how these caps, floors and qualification rules interact is essential to making informed decisions about whether to keep, modify or drop a long-term-care policy as they age.
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Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
